Information Systems Strategy

Chapter 1
INFORMATION SYSTEM
Introduction
 In 1959, Peter Ducker predicted :

 Importance of information and information technology

 Will be more “knowledge workers”.

 Knowledge society emerge – where education (paper

qualification) will determine the earning power

Introduction
 Other similar terms:

 Network society / era

 New economic

 K-economy
Caused by the
emergence of
 Digital society / era powerful,
 Internet era inexpensive,
easy to use
computers.
 Short Discussion
 What are the purposes of IT and computers in our life ? How

do we use it?

 Is IT important to in our personal life and work?

 What are the effects of IT to us as an individual?

IT and organizations
 Why IT is important to organization

 Increase competitiveness / productivity

 Reduce cost (operational)

 Faster , cheaper, better

 Resulted in :
GLOBALIZATION
 Integration of economic throughout the world enabled by

technology

 Consists of:

 Economic changes

 Cultural changes

 Technological changes
Information System (IS)
 Combination of :
Technology
 Hardware , software and

telecommunication networks that IT

people build and use to collect, create IS

and distribute useful data (typically in

an organizational settings)
 Expanding Roles of IS
1. Data Processing: 1950s-1960s

2. Management Reporting: 1960s-1970s

3. Decision support: 1970s-1980s

4. Strategic and End User Support: 1980s-1990s

5. Global Internetworking: 1990s-2000s

Some common uses of IS
 Process sales transactions

 Manage applications eg: loan

 Decide where, when and how to market product

 Enable withdrawals from ATMs

 Live videos

 Buy airline tickets

The root of IS
DATA INFO KNOWLEDGE WISDOM

 Data

 raw material

 recorded, unformatted info eg: words and numbers

 no meaning in and of itself

The root of IS
 Info

 data formatted

 More useful than data

 Knowledge

 Relationship between different pieces of info

 Wisdom

 Accumulated knowledge

 Gained through academic & personal experience

The root of IS
DATA Info Knowledge Wisdom

140280051211 140280-05-1211 140280-05-1211 140280-05-1211

Ali Ali

-Health
-Education
-employement
Unformatted data Formatted Data
Relationship

Meaning: Meaning: Meaning: Meaning :

??? NRIC Nu Ali’s NRIC Nu Can be used to track
many info
 Data, Information and Systems
 Generating Information

 Computer-based ISs take data as raw material, process it, and

produce information as output.

13
Figure 1.1 Input-process-output
Data, Information and Systems
 Information in Context

14 1.2 Characteristics of useful information

Figure
Data, Information and Systems

Figure 1.5 Qualities of humans and computers that contribute to synergy

15
Data, Information and Systems
 The Benefits of Human-Computer Synergy

 Synergy

 When combined resources produce output that

exceeds the sum of the outputs of the same resources
employed separately
 Allows human thought to be translated into efficient
processing of large amounts of data

16
IT versus IS
IT IS
Machine technology that is Combination of h/w, s/w,
controlled by / uses info telecommunication networks that
(mechanical) people use to collect, create and
distribute data
Goal: mechanical / electrical Goal: provide useful data to
means people
Eg: robot Eg: use IT to manage sales in a
company
Business System
Careers in IS
 Systems / Computer / IT  Database administrators
analyst *
 System designers
 IS managers
 IS consultants (eg:IBM)
 System operators
 Lecturers/ trainers /
 System programmers professors
 Network administrators  Chief Information Officer

(CIO)
* forecasted to be top 10 jobs in next 10 years with big earning capacity
IS Personnel
 Should have

 Technical competency

 Business competency

 Systems competency
Types of IS
TPS
OAS
MIS
E-
Data EIS
Mining
commerce

ERP
Intelligent SCM KMS
Systems

GIS
CRM DSS
 Classification of IS
Information Systems

Operations Support System

Management Support
System

Transaction Office Management Decision Executive

processing systems Process control automation information support information
systems systems systems systems
systems
Types of IS - TPS
 Transaction Processing Systems ("TPS") are designed to process
routine transactions efficiently and accurately.
 A business will have several (sometimes many) TPS; for example:

- Billing systems to send invoices to customers

- Systems to calculate the weekly and monthly payroll and tax payments
- Production and purchasing systems to calculate raw material
requirements
- Stock control systems to process all movements into, within and out of
the business
Type of IS - MIS
 Management Information Systems A management

information system ("MIS") is mainly concerned with

internal sources of information.

 MIS usually take data from the transaction processing systems

and summarise it into a series of management reports.

 MIS reports tend to be used by middle management and

operational supervisors.
Types of IS -DSS
 Decision-Support Systems Decision-support systems

("DSS") are specifically designed to help management make

decisions in situations where there is uncertainty about the
possible outcomes of those decisions.

 DSS comprise tools and techniques to help gather relevant

information and analyse the options and alternatives.

 DSS often involves use of complex spreadsheet and databases

to create "what-if" models.

Types of IS - KMS
 Knowledge Management Systems Knowledge
Management Systems ("KMS") exist to help businesses
create and share information.
 These are typically used in a business where employees create
new knowledge and expertise - which can then be shared by
other people in the organisation to create further commercial
opportunities.
 Good examples include firms of lawyers, accountants and
management consultants.
Types of IS - KMS
 KMS are built around systems which allow efficient

categorisation and distribution of knowledge.

 For example, the knowledge itself might be contained in

word processing documents, spreadsheets, PowerPoint

presentations. internet pages or whatever.

 To share the knowledge, a KMS would use group

collaboration systems such as an intranet.

Types of IS - ESS
 Executive Support Systems An Executive Support
System ("ESS") is designed to help senior management make
strategic decisions. It gathers, analyses and summarises the key
internal and external information used in the business.
 A good way to think about an ESS is to imagine the senior
management team in an aircraft cockpit - with the instrument
panel showing them the status of all the key business activities.
ESS typically involve lots of data analysis and modelling tools
such as "what-if" analysis to help strategic decision-making.
Types of IS - OAS
 Office Automation Systems Office Automation Systems

are systems that try to improve the productivity of employees

who need to process data and information.

 Perhaps the best example is the wide range of software

systems that exist to improve the productivity of employees

working in an office (e.g. Microsoft Office XP) or systems
that allow employees to work from home or whilst on the
move.
Why IS
 Early history : poor service and worse attitude

 Modern IS : service customers proactively

 How IS is used to serve customers now?

Strategic uses of IS
INITIATIVE BENEFIT
A company can gain advantage if it can sell more units at
Reduce costs a lower price while providing quality and maintaining or
increasing its profit margin.
A company can gain advantage if it deters potentials
Raise barriers to
entrants into the market, leaving less competition and
market entrants
more market potentials.
A company can gain advantage if it creates high switching
Establish high
costs; making is economically infeasible for customers to
switching cost
buy from competitors.
Create new A company can gain advantage if it offers a unique
products or product or service.
services
Strategic uses of IS
INITIATIVE BENEFIT
Differentiate A company can gain advantage if it can attract customers
products or by convincing them its product differs from the
services competitors.
Enhance products A company can gain advantage if its product or service is
or services better than anyone else’s.
Companies from different industries can help each other
Establish alliances gain advantage by offering combined packages of goods
or services at special prices.
A company can gain advantage if it can lock in either
Lock in suppliers
suppliers or buyers, making it economically impractical
or buyers
for suppliers or buyers to deal with competitors.
Internet Usage Statistics
 World Internet Usage Statistics

 http://www.internetworldstats.com/stats.htm

 Malaysia Internet Usage Statistics

 http://www.internetworldstats.com/asia/my.htm
END OF CHAPTER 1